German bank merger should send shudders through global markets

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Comment: German bank merger should send shudders through global markets

Apart from the potential for cost reductions, the appeal of the merger to the banks and their government is the scale and the complementary nature of the banks’ operations.

Leading into the crisis, senior executives within the bank were concerned that UBS wasn't gaining the market share in the US they hoped for and urged the US team to be more aggressive, giving them access to large amounts of ultra-cheap funding from the big UBS retail deposit base to expand into, most critically, sub-prime lending and securities trading.

, concerned by its massive derivative exposures, lack of profitability and limited access to external capital. It remains, essentially, a very, very large investment bank. There has been, since the crisis, regular speculation about its survival and, despite having chewed up and spat out four chief executives in the past decade, it hasn’t yet found stability. While it made a profit last year – its first since 2014 – it lost €409 million in the December quarter.

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